Congress offers $30 billion water-reuse tax break—mostly to big industry
H.R. 2940 — Advancing Water Reuse Act · Filed by Darin LaHood (R-IL) · 25 cosponsors · Introduced Apr 17, 2025 · Referred to committee
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What it does
This bill creates a 30% federal tax credit for businesses and utilities that invest in water reuse projects—systems that recycle water for industrial, manufacturing, data center, or food processing operations instead of using fresh groundwater. The credit applies to the cost of installing, replacing, or modifying on-site recycling systems, or to municipal water recycling infrastructure, and expires for projects begun after December 31, 2032.
Why we flagged it
The bill's operative mechanism is a tax credit (30% of qualified investment) designed to encourage private and municipal adoption of water reuse infrastructure. It is a subsidy-by-tax-expenditure, not a regulatory mandate or direct appropriation.
What the text implies
- The credit may be claimed by utilities that receive property transfers from private entities under binding agreements, creating a potential arbitrage: a private firm could transfer equipment to a utility and claim the credit while the utility cannot, effectively allowing the private party to monetize the credit without owning the asset long-term.
- The 30% credit is not capped by dollar amount or per-project limit, meaning large industrial water recycling projects could generate substantial tax credits with no aggregate spending ceiling.
The full analysis lists 4 implications of this text.
Who stands to gain
industrial and manufacturing companies; data center operators; food processing companies